Dynamic Applied Regional Trade Model (DART)

The Dynamic Applied Regional Trade (DART) model has been developed and extended at the Kiel Institute for the World Economy since the late 1990s. It is a multi-regional, multi-sectoral recursive dynamic computable general equilibrium (CGE) model of the world economy. It was designed to analyse long-term future trends resulting from international climate, energy, agricultural and land-use policies with regard to the relevant interactions and feedback effects between different sectors of an economy.

In DART the world is divided into different regions. Each region´s specific economic structure and trade patterns are characterized by a system of simultaneous non-linear equations. These simulate the behaviour of economic agents (consumers and producers) based on microeconomic theory, and depict both resource constraints and macroeconomic closure rules. The model’s parameters are calibrated to the up-to-date data of the Global Trade Analysis Project (GTAP), which include bilateral trade, production technologies and output in different sectors as well as trade data on products and commodities. Running the model delivers a set of variables at which all products are purchased and all revenues are spent or invested – this state is called a general equilibrium. When simulating policy shocks, the model solves for equilibrium at all product and factor markets to arrive at the new equilibrium quantities and prices.

DART is recursive dynamic, meaning that the evolution of the regional economies over time is described by a sequence of single-period static equilibria, which are connected through capital accumulation and changes in labour supply: For each time-step an equilibrium is found, with a characteristic capital accumulation (result of investment from previous time-steps) and labour supply (result of increasing efficiency and population growth) in each region. These measures serve as inputs for the next time-step, so that a new equilibrium is found, and so forth.In this manner, a time-series can be produced until a freely chosen time horizon.

The DART model has been applied to analyse among others international climate policies, environmental policies, energy policies, and agricultural policies (e.g. Kyoto Protocol, European Emissions Trading System, EU climate policy package and biofuel targets). To flexibly apply the model to different themes, several versions of DART have been developed, which are tailored for specific topics and are regularly updated to the latest data sets. Descriptions of their characteristics as well as recent applications can be found below. For further information on the basic DART model see Klepper et al. (2003).